Warren Buffett on Saturday criticized criticism of stock trading platforms like Robinhood, which allows buying and selling for free as encouraging a “gaming impulse.”
“There is nothing illegal about it, there is nothing immoral, but I do not think you are building a community around people who do it,” he said at Berkshire Hathaway’s annual meeting, which was held almost this year due to coronavirus , reported The Guardian.
Buffett lamented that many inexperienced stock traders treat the market as a “casino”
He pointed out that there were more than 2,000 car companies in 1903, and although motor vehicles revolutionized society, almost all businesses went out of business, according to The Guardian.
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“There is much more to choosing stocks than figuring out what will be an incredible industry in the future,” he said. “I just want to tell you that it’s not as easy as it sounds.”
He said owning an S&P 500 index fund is a better bet for most people.
Robinhood has “become a very significant part of the casino aspect, the casino group that has joined the stock market in the last year or a year and a half,” he said according to CNBC.
Buffett said U.S. companies may be a good place for solid investment, but they also make good “game chips.”
“If you take these game chips into account when people have money in their pocket for the first time and you tell them they can make 30 or 40 or 50 trades a day and you do not charge any commission but you sell their order flow or no matter what … I hope we have no more of it, “CNBC reported.
The Robinhood app was in hot water earlier this year during GameStop’s purchase difficulty.
The Berkshire meeting is usually held in Omaha and may attract about 40,000 investors, but was held in Los Angeles this year to accommodate Vice President Charlie Munger.
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Munger agreed with Buffett’s assessment of Robinhood. “I think it’s just awful that something similar brought investment from civilized men and decent citizens,” he said, according to CNBC. “It’s deeply wrong. We don’t want to make our money selling things that are bad for people.”